Hot Topic Earnings Preview

Hot Topic (NAS: HOTT) will look to match Wall Street forecasts for the fifth consecutive quarter. The company will unveil its latest earnings on Wednesday. Hot Topic is a mall- and Web-based specialty retailer.

What analysts say:

Buy, sell, or hold?: Analysts strongly back Hot Topic, with four of six rating it a buy and the remainder rating it a hold. Analysts like Hot Topic better than competitor Wet Seal overall. That rating hasn't budged in three months as analysts have remained steady in their opinion of the stock.

Revenue forecasts: On average, analysts predict $208.1 million in revenue this quarter. That would represent a decline of 2% from the year-ago quarter.

Wall Street earnings expectations: The average analyst estimate is earnings of $0.20 per share.

What our community says:The majority of CAPS All-Stars are wary about the future of HOTT, with 61.2% granting it an underperform rating. Fools are of two minds on the stock, as 55% of the community is giving it an outperform rating and 45% an underperform rating. After logging only two posts over the past month, it's clear that Fools are bearish on Hot Topic. Hot Topic's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:Over the last four quarters, revenue has fallen an average of 1.3% year-over-year.

Now, a look at how efficient management has been at running the business. Traditionally, margins serve as an illustration of how efficiently a company captures portions of sales dollars. Hot Topic's net margins, which reflect what percentage of revenue becomes profit, have rise year-over-year for the last two quarters". Here is how Hot Topic has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

33.9%

32.2%

31.3%

32.2%

Operating Margin

2.4%

(6.7%)

(7.7%)

(0.3%)

Net Margin

1.8%

(4.1%)

(4.8%)

(0.3%)

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